Question

Shiloh opens a savings account in which interest is compounded annually. The balance in the account is given by the following exponential expression, where t represents the time in years. Which statement correctly interprets the given expression? 125(1.025)t

A. Shiloh initially invested $125, which grows annually at a rate of 2.5%.


B. Shiloh initially invested $125, which grows annually at a rate of 1.025%.


C. Shiloh initially invested $1,025, which grows annually at a rate of 12.5%.


D. Shiloh initially invested $1,025, which grows annually at a rate of 1.25%.

Help asp

Answer 1

Shiloh initially invested $125, which grows annually at a rate of 2.5%.

Explanation:

The balance in the account is given by the following exponential expression,

`125(1.025)^t`

Exponential growth formula is

`A= P(1+r)^t`

Where P is the initial amount invested

r is the rate of interest

When we compare the formula with given expression , we can see that we have 125 in the place of P

So initial amount invested is $125

Now we find out 'r'

1+ r = 1.025

Subtract 1 on both sides

r= 0.025

To get percentage we multiply by 100

0.025 * 100 = 2.5%

Shiloh initially invested $125, which grows annually at a rate of 2.5%.